Athletes, sports teams, and entertainers are all evaluated by their ability to generate revenue, win championships, and gain critical acclaim. Public companies are assessed based on their stock performance; we can quickly see when an entity is at the top of its game and when it’s not.

But what about a privately-held business? How can owners quickly figure out if their company is at the top if its game?

Each industry has its own distinct set of value drivers. Web businesses are ranked by the number of impressions and clicks. Hotels are scored according to occupancy rate. For ARM firms, the best marks are given to companies that meet the following criteria. Take this simple test to see how well your business is performing.

Client Concentration – High levels of client concentration elevate a business’ risk profile. In the ARM industry, client concentration risk exists within most consumer market segments. It’s not unusual for an ARM company to serve a telecom or bank client that generates a disproportionately high percentage of that company’s revenue. This risk could be offset by serving multiple lines of business from the same client.

Test: If your company’s largest client generates less than 10% of revenue, score three points. If the client generates between 10% and 20%, score two points. Between 20% and 50%, score one point. Above 50%, zero points.

Revenue Growth – A company is performing well when a consistent level of top line revenue growth is achieved over a long period of time. Ideally, revenue growth is coming from a combination of new business from existing clients and by onboarding new clients.

Test: If your company achieved more than 10% revenue growth this year over last year, score three points. If your company generated between 1% and 10% growth, score two points. No growth, score one point. If your company lost revenue this past year, score zero points.

Sustainable Profit Margin – A company is performing well if it has consistent profitability levels year after year. Adjustments may be needed to account for one-time events, like a move, or if the company is incurring excess operating expenses, like if a family members is on the payrole.

Test: If your company’s profit margin exceeds 20%, score three points. If it’s between 10% and 20%, score two points. If it’s less than 10%, score one point. If your company is losing money, score zero points.

Poor Bookkeeping – It’s essential for an owner to have a good handle on his or her company’s financial performance throughout the year. Many closely-held businesses wait until year-end to generate a financial statement, while some don’t generate one at all and instead rely on tax returns. Vendors, clients, leaders, landlords, new partners, and others may require an updated review of a company’s financial performance. However, very few owners hold managers accountable to a budget.

Test: If your company maintains current financial statements and a budget, score three points. If you maintain a current financial statement, score one point. If you simply have a tax return, score zero points. Add one extra point if you maintain a monthly budget-to-actual report, and add two extra points if you maintain a forecast.

Test: If you have a dedicated compliance supervisor, invest in compliance technology, and actively participate in an industry advocacy group, score three points. If you have a dedicated compliance supervisor and invest in compliance technology but don’t support any industry groups, score two points. If you invest in compliance technology but don’t have a dedicated supervisor, score one point. If your head is in the sand and you don’t pay attention to compliance, score zero points.

So how did your company do?

If you scored more than 15 points, you’re a rock star in your industry.

Scoring 10 to 15 points means you’re doing well, but there are areas for change.

If your company scored less than 10 points, you may want to consider ways to improve.

We recommend you score your business today and revisit every six months to make sure you’re doing everything you can to increase your company’s value.